Micro And Macro: The study of economics is divided into two parts micro and macro economics. An economics system may be looked as a whole or in terms of small units.
Micro Economics Or Price Theory: The word “micro” means little or
small or a millionth part. When we speck micro economics we mean it is some
small part of whole economy we are analyzing. In micro economics we are chiefly
concerned with the behavior of an individual household, individual firm and an
individual producer. Business managers what to produce and how this production
to be organized. The people use marginal analysis to determine their best
course of action. Although we could supply an endless list, here are the few of
the issue that can be addressed by micro economics analysis;
1)
How Is Consumer Behave.
2)
How Business Firm Make Choices.
3)
How Prices Are Determined In Market.
4)
How Price And Taxes Controls Affect
Consumer And Producer Behavior.
5)
How The Structure Of Markets Affects
Economic Performance.
6)
How Wages, Interest Rates And Rent,
Profits Are Determined.
7)
How Income Is Distributed Among
Families.
Meaning of
economics in micro the world of bounding. It is study of particular
organization their behavior and immediate interaction with their environments
plus (+) the study of forces which determine particular relative prices.
Important Points Of Micro Economics: Some important points of
micro-economics are following;
1) Taxation Problem: Micro economics helps us in explaining the effect of tax imposition and
the determination of foreign exchange rate.
2) Free Market: It
is also very helpful in understanding the working of free market economy.
3) The Efficiently Conditions: It explains the efficiency conditions in production and
consumption.
4) Study Of Welfare: It also studies the welfare economics. It also explains that how free
enterprise economy functions without central control.
5) Wrong Assumptions: Assumptions of free market and full employment are not true. It does not
study the whole economy. So we can simply say that in micro economics we study
the behavior of individual resources.
Macro Economics Or Theory Of Income
And Employment:
Macro means large or great. It covers aggregates and averages such as national
income, total employment, total savings, total investment and general level of
prices. Macro economics also studies and explains the role of a government as a
solver of economic problems. Similarly if we are saying that there is business
crises in the world, it is also macro economics problems.
Important Points Of Macro Economics: There are many important points of
macro economics but these two are most important;
Aggregate Analysis: Macro economics studies the overall
averages and aggregates of the system.
Solution Of Economics Problem: Macro economics can solve the
problems like unemployment and inflation in the country. Thus we can say micro
economics studies the national problems and macro economics studies the
international problems of economy. In modern economics there is close
relationship between micro and macro economics.
Interdependence Of Micro And Macro
Economics: Keynes
says that micro analysis my prove, false when those are applied to the economic
system as a whole.
·
Example No 1: An stealing may rich himself by
stealing money but the society as a whole can not get rich by looting each
other property.
·
Example No 2: It may be true for individual but
not valid when applied to the employers class as a whole. Therefore macro
economic analysis are very useful for the solution of practical economic
problems of our times such as unemployment and inflation. Micro and macro, both
analysis have and individual significance.
Economic Problem And It Create: The scarcity of means or resources
create two kinds of problems. This can only be done if we arrange our wants in
a scale of performance, ordinary necessaries are satisfied first comforts are
next and luxuries at the end. Every economy has to solve the following some
main problems as follow;
What Goods To Produce?
The first
function is to decide which goods are to be produced and in how much quantity.
The decision about the allocation of resources between consumer goods and
capital goods, their quality and quantity of utmost importance from the point
of view of economic growth.
How To Produce?
There are
many alternative methods or techniques of producing goods. But the problem
always create that how, because there are many choices and which one we should
be select.
How To Distribute The National
Income?
The
distribution of national income among the members of the community is a burning
issue both in the field of economics and polities. The socialists are of the
view that in a free enterprise economy each individual should get his share
from the total output of goods according to the income available to him through
his genuine efforts.
How To Ensure Growth?
1) Increasing the rate of investment.
2) Replacement of capital goods.
3) By improving the technical process of
production.
A society
therefore shall have to take timely decision for allocating scarce resources
for investment, replacement and technological progress.
VARIOUS ECONOMIC CONCEPT
Wants: In economic the term “ends” means
the goal which a man wishes achieve in the economic aspects of his life. Human
wants are unlimited. When a man born with him. There are two kinds of human
wants.
1)
Economic Wants
2)
Non-Economic Wants
In the book
of economics we will only discuss the economic wants.
Economics Wants: All those wants which should
completed by wealth called economic wants. There are three kinds of economic
wants.
1) Necessities:
That human wants which are the basis for the life like food, shelter and
clothes are called necessities. Necessities of efficiency, conventional
necessities and habits necessities are also involve in necessities of life.
2) Comforts Of Life: That necessities which give us relaxation and easy feelings in our life
called comforts of life. From comforts of life we can do a work easily, suppose
boy go to his school on foot and when he bought a cycle and use that. So this
will comfort of his life.
3) Luxuries:
luxuries of life means the goods and services, which if use in our life as
luxury. These wants are not necessary for us. We wish these wants for high
reputation. But in one time, if a poor man use a car for his business that will
luxuries of his life and for a professor will comforts and for a doctor will be
necessities of life.